Recognizing risk Caradine Corp, a media services firm with net eamings of $3,210,000 in the last year, is considering the following projedts Project Initial investment 31,000Details 499,000 Replace existing office furnishings Purchase digital film-editing equipment for use with several existing accounts Develop proposal to bid for a $2,080,000 per year 10-year contract with the US Navy, not now an account Purchase the exclusive rights to market a quality educational television program in syndication to locall markets in the European Union, a part of the firm\'s existing business activities 400,000 681,000 ng y The media services business is cyclical and highty competitive. The board of directors has asked you, as chiet financial officer, to evaluate the risk of each proposed project and rank i low, \"medium,\" or high. The risk for bruject A is The risk for project B is The risk for project Cis The risk for project D is (Select from the drop-down menu) (Select from the drop-down menu) (Select from the drop-down menu) (Select from the drop-down menu) od Click to select your answers)
1. The risk for project A is low risk. The amount is small as compared to the last year earnings of the company and the company is certain about the amount to be paid.
2. The risk for project B is medium risk. The company can continue with the exisiting equipments but in order to stay competitive the company has to upgrade the equipments.
3 The risk for project C is medium risk. Though the amount proposed to be incurred for bid shall be sunk cost but there is medium risk because it will effect the current business and existing accounts.
4. The risk for project D is high risk. The risk is high because the amount involved in large and there are several risk factors involved such as non compliance with legal formalities in other country and fluctuations in currency exchange rates.
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